Gold Mining & Climate Change
In my five years in the precious metals industry, conversations around the environmental impact of gold mining on climate change have been limited. I find that very alarming, as it is estimated that 2% of Green House Gases Emissions result from the water and fossil fuel intensive nature of mining activity. Does the precious metals industry take CSR seriously? Why is it that OECD guidelines on ‘good sourcing’ from non-conflict zones are more important than environmental issues? Nevertheless, despite the scarcity of environmentally focused initiatives, steps taken by the Responsible Jewellery Council and the International Council on Mining and Metals  have pushed mining companies to work towards mitigating and adapting to climate change.
Newmont Mining and its Sustainability Role
Newmont mining – the second largest player in the gold mining industry (Figure1) – has recognized challenges in regards to Climate Change. Newmont has implemented climate change mitigation transparently by disclosing its carbon emissions since 2008 and by preparing a yearly sustainability report. Moreover, Newmont became the first the gold mining company selected for the Dow Jones sustainability index.
Figure 1: Source – http://www.mining.com/the-worlds-top-10-gold-producers/
What may have prompted Newmont to tackle climate change? Since the early 2000s Newmont has been facing challenges with its environmental damage i.e. perceived water pollution in Indonesia damaged its reputation, concerns over water impact on a community in Peru led to a shutdown of operations and legal implications both in 2004 and 2011. In light of recognition of climate change and environmental protection, a power shift has occurred to communities, media and legal authorities.
The Implications of Climate Change on Newmont
The manifestation of climate or related regulations could have ample effect on Newmont Mining’s business. These effects could be categorized into organizational, legal, reputational and financial. It could be argued that financial could also be affected by organizational, legal and reputational impact as well, as the effect that climate change could have on Newmont may be amplified by the inter-relational aspects of these elements (Figure2). For example, severe weather conditions such as increase in wildfires, drought and/or increase in water levels could disrupt operations, production schedules, routes, infrastructure and risk safety for employees (Figure3). Any risk safety for employees could damage the firm’s reputation globally and within the community it is installed, lead to litigations and impact Newmont financially.
Figure 2: Categorization of the Impacts of Climate Change on Organizations Figure 3: Climate Change Cycle for Businesses
The Impact of Newmont on Climate Change
Having identified the implications that climate change could have on Newmont, it is essential to understand how Newmont’s mining business is impacting climate change. The main processes of mining – exploration, construction of the mine, extraction (mining and support operations) and closure of the mine – contribute largely to Green House Gases emissions through the burning of fossil fuels. Furthermore, due to the decreasing availability of higher-graded gold at surface and the need to dig deeper to find gold, it is estimated that emissions will continue to increase over time . A worrying example is that in 2015, despite having made an effort to lower utilization of coal energy, Newmont increased its emissions of CO2. Moreover, through water pollution, water consumption, wastage, mercury production, etc., mining affects the environment and ecosystem, which in turn amplifies the effect of climate change (Figure3).
Figure 4: Source – http://sustainabilityreport.newmont.com/2015/
Newmont’s Action to mitigate climate change
Newmont is working towards mitigating climate change (and its associated risks), and working towards a plan to adapt to the consequences of climate change. It has essentially recognized financial and environmental benefits to switching to low-carbon and more efficient sources of energy. It has also undertaken feasibility studies such as how to use solar energy to power its operations at the Tanami mine situated in an arid region in Australia. Thus saving 13% of the mine’s fuel consumption and using renewable clean source of energy. Other steps taken are: recycling 59 % of its water, taking into consideration the impact of their operations on the ecosystem, managing the disposal of rocks and waste and minimizing mercury and cyanide.
How could Newmont further adapt and mitigate climate change
Despite the steps taken to tackle climate change, Newmont could be doing more. It has so far only taken a ‘precautionary approach’, and it may be argued that businesses should embrace radical changes in response to climate change. But how? Newmont’s competitor – Barrick Gold may have taken more radical steps in fighting climate change, as it’s Carbon Disclosure A- rating is higher than Newmont’s B. However, as an ex-participant of the precious metals industry, the radical changes will only happen once the conversation around climate change becomes an important matter.
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